What to Do About Loan to Income Ratios? Consider Moving

The percentage of consumers who are considered to be highly indebted by the Bank of Canada are those who have mortgage loans in excess of 450% of one's income (i.e., for those making $100,000 per year, a loan of $450,000 or more).

Not surprisingly, national data varied greatly by region in Canada, with indebtedness levels in Vancouver and Toronto truly at out-of-this-world levels, despite new mortgage rules which have been put in place in an effort to curtail such lending.

In Vancouver, for example, the percentage of borrowers with loans that amounted to 4.5-times (or higher) than their annual income remained around 38%, down from as high as 42% in mid-2017.

These recent mortgage rules have seemingly taken many would-be homeowners out of the market in the short term, however the trend appears to be taking hold across most major cities in Canada (folks in Vancouver sure should be jealous of Halifax, with a rock-bottom ratio of highly indebted borrowers dipped to around 6%; Halifax, Ottawa, and Montreal were all under 10%).

The country's largest real estate market, Toronto, saw the steepest reduction since mid-2017 when the changes were announced (the percentage of highly indebted borrowers dropped from 38% to 28%).

Considering where to live will undoubtedly play the biggest deciding factor in how much debt one will have to take over one's lifetime. I've heard Halifax is nice - I might check that city out.

Invest wisely, my friends.